How should a same-sex couple prepare for, handle, and succeed in financial planning and management once they have tied the knot?
To succeed in financial planning and management as a same-sex couple, both parties need to be transparent, both trusting and trustworthy, and responsible. In marriages, financial planning and management can be challenging—regardless of the gender of both parties.
To ensure financial planning and management success, do the following:
- Talk about finances
- Maximise on government benefits
- Understand and prepare for taxes
- Assess health insurance coverage benefits
- Set up an emergency savings account
- Consider long-term goals: Estate planning and retirement
- Be transparent with each other and do things together
Talk about your finances
Couples should begin discussing with each other what their financial situation is and what their future goals are.
Be open about each other’s financial situation. If there are any investments and debts, talk about them. Disclose where the investments are and the amount of debt which needs to be addressed.
Trust is key. Lay all assets and liabilities on the table and disclose the tiniest details of each other’s financial situation. This means having mutual knowledge about each other’s credit card(s), student or car loans, medical bills, mortgages, and other similar debt repayment obligations.
Regardless of whether each person's financial goals are the same or a little different, being transparent helps build trust and design a more realistic plan for the future as a married couple.
Maximise on government benefits
Look into social security benefits and how to qualify for it based on each other’s income, especially for couples with one spouse earning significantly lower than the other. For higher-earning spouses, expect the possibility of higher taxes.
When one partner is under government disability or welfare, the spouse could lose some benefits due to the increase in overall household income. Government benefits are dependent on specific personal and marital situations.
Understand and prepare for taxes
Taxation and tax obligations will depend on personal and marital situations, particularly financially. Taxes may positively or negatively change drastically.
Engage the services of a financial advisor or a taxation lawyer so couples can be guided in preparing for, appropriately fulfilling their tax obligations as a married couple.
Assess health insurance coverage benefits
Couples should inspect whether their spouse has generous, or even adequate, healthcare coverage. If a couple is on the same plan and they’re getting married or already married, they may be able to enjoy significant savings.
Set up an emergency savings account
Save for the rainy days. Maintaining an emergency savings account of at least three or six months’ worth of savings in each other’s bank account could prove to be helpful in cases of long-term care.
Savings will provide protection and access to personalised in-home care services or LGBTI-friendly retirement homes.
Open an emergency savings account at a bank or a credit union without any check writing, debit card, bill pay, or any other unnecessary features and add-ons.
Try not to connect the emergency savings account to any other accounts for fund transfers, especially for outgoing electronic fund transfers (EFT). Make sure to only access the account when absolutely necessary and avoid doing it on a whim without making accessibility impossible.
Consider long-term goals: Estate planning and retirement
Plan for the long term, especially on estates and retirement.
Review heirs and/or beneficiaries named for all retirement and benefit accounts, estates, and other assets. Make sure all these are in line and complementary to the current financial situation and conjugal financial objectives. Do not forget to look into how the combined overall marital income affects each other’s tax contributions limit.
Be transparent with each other, and do things together
A marriage, whether same-sex or opposite-sex couple, owes its continued success to both spouses’ efforts and willingness to share joys as well as challenges. Two of the key ingredients of a successful marriage is trust and transparency.
Be transparent about each other’s financial situation, including all minute details of assets, liabilities, and any other financial considerations. Gain and keep their trust, and never forget to have fun. It is believed that talking about money can lead to happier married lives.
These are the benefits of marriage all married couples enjoy:
- Enjoy estate and gift tax nuptial deductions
- Get protection if a spouse dies without leaving a will
- Given guidance and assistance on decision-making in the event that a spouse gets incapacitated
- Enjoy spousal social security benefits
- Enjoy veteran and military benefits (if applicable)
- Get covered under a spouse’s healthcare insurance
Answer the checklist below to help focus on what matters most for both individuals and for the marriage:
- Inspect and look into how the same-sex marriage recognition in Australia affects each other’s taxes, benefits, and other financial considerations
- Review workplace retirement plans and their beneficiary designations, individual retirement coverage, insurance policies, and your individual bank accounts
- Study, review, and update (if necessary) healthcare directives and power-of-attorney documents
- Speak and consult with a financial adviser(s) or lawyer(s)
Talk to and discuss with each other about the current financial situation and financial goals and start designing a better, stronger, and more realistic financial plan as a married couple.